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Sugar-based beverage taxes and beverage prices: Evidence from South Africa's Health Promotion Levy.
Soc Sci Med. 2019 10; 238:112465.SS

Abstract

A growing number of jurisdictions are introducing taxes on sugar-sweetened beverages (SSBs) in efforts to reduce sugar intake, obesity, and associated metabolic conditions. A key dimension of the impact of such taxes is how they induce changes in the prices of the taxed beverages and their un-taxed substitutes. At present these taxes have typically been based solely on volume. More recently, however, due to the potential to target the source of SSBs' health harms and to incentivize product reformulation, SSB taxes are being levied based on sugar content. In April of 2018 South Africa implemented such a tax, the Health Promotion Levy (HPL), at a rate of 0.021 ZAR (approximately 0.15 US cents) for each gram of sugar over an initial threshold of 4 g/100 ml. Drawing on a dataset of price observations (N = 71, 677) collected in South Africa between January 2013 and March 2019, we study changes in beverage prices following the introduction of the HPL. We find null price increases among un-taxed beverages and find significant price increases for carbonates, the largest taxed product category. However, within carbonates we find similar increases in price for low- and high-sugar brands, despite the underlying difference in tax liability. In addition, while we find evidence of product reformulation, we find significant price increases among the brands that reduced their sugar content. While the findings are broadly consistent with the price changes of volume-based SSB taxes, future considerations of price effects of sugar-based SSB taxes need to account for the opportunity for intra-firm heterogeneity in price response among large multi-product firms.

Authors+Show Affiliations

SAMRC/Wits Centre for Health Economics and Decision Sciences - PRICELESS SA, School of Public Health, Faculty of Health Sciences, University of the Witwatersrand, Johannesburg, South Africa. Electronic address: nick.stacey@wits.ac.za.SAMRC/Wits Centre for Health Economics and Decision Sciences - PRICELESS SA, School of Public Health, Faculty of Health Sciences, University of the Witwatersrand, Johannesburg, South Africa.Department of Nutrition, Gillings School of Global Public Health and Carolina Population Center, University of North Carolina, Chapel Hill, NC, USA.Department of Economics, Faculty of Commerce, University of Cape Town, Cape Town, South Africa.SAMRC/Wits Centre for Health Economics and Decision Sciences - PRICELESS SA, School of Public Health, Faculty of Health Sciences, University of the Witwatersrand, Johannesburg, South Africa.SAMRC/Wits Centre for Health Economics and Decision Sciences - PRICELESS SA, School of Public Health, Faculty of Health Sciences, University of the Witwatersrand, Johannesburg, South Africa.

Pub Type(s)

Journal Article
Research Support, Non-U.S. Gov't

Language

eng

PubMed ID

31472286

Citation

Stacey, Nicholas, et al. "Sugar-based Beverage Taxes and Beverage Prices: Evidence From South Africa's Health Promotion Levy." Social Science & Medicine (1982), vol. 238, 2019, p. 112465.
Stacey N, Mudara C, Ng SW, et al. Sugar-based beverage taxes and beverage prices: Evidence from South Africa's Health Promotion Levy. Soc Sci Med. 2019;238:112465.
Stacey, N., Mudara, C., Ng, S. W., van Walbeek, C., Hofman, K., & Edoka, I. (2019). Sugar-based beverage taxes and beverage prices: Evidence from South Africa's Health Promotion Levy. Social Science & Medicine (1982), 238, 112465. https://doi.org/10.1016/j.socscimed.2019.112465
Stacey N, et al. Sugar-based Beverage Taxes and Beverage Prices: Evidence From South Africa's Health Promotion Levy. Soc Sci Med. 2019;238:112465. PubMed PMID: 31472286.
* Article titles in AMA citation format should be in sentence-case
TY - JOUR T1 - Sugar-based beverage taxes and beverage prices: Evidence from South Africa's Health Promotion Levy. AU - Stacey,Nicholas, AU - Mudara,Caroline, AU - Ng,Shu Wen, AU - van Walbeek,Corné, AU - Hofman,Karen, AU - Edoka,Ijeoma, Y1 - 2019/07/31/ PY - 2019/02/07/received PY - 2019/07/19/revised PY - 2019/07/30/accepted PY - 2019/9/1/pubmed PY - 2020/8/26/medline PY - 2019/9/1/entrez KW - Diet KW - Non-communicable disease KW - Obesity KW - Prices KW - South Africa KW - Sugar KW - Sugar-sweetened beverages KW - Taxes SP - 112465 EP - 112465 JF - Social science & medicine (1982) JO - Soc Sci Med VL - 238 N2 - A growing number of jurisdictions are introducing taxes on sugar-sweetened beverages (SSBs) in efforts to reduce sugar intake, obesity, and associated metabolic conditions. A key dimension of the impact of such taxes is how they induce changes in the prices of the taxed beverages and their un-taxed substitutes. At present these taxes have typically been based solely on volume. More recently, however, due to the potential to target the source of SSBs' health harms and to incentivize product reformulation, SSB taxes are being levied based on sugar content. In April of 2018 South Africa implemented such a tax, the Health Promotion Levy (HPL), at a rate of 0.021 ZAR (approximately 0.15 US cents) for each gram of sugar over an initial threshold of 4 g/100 ml. Drawing on a dataset of price observations (N = 71, 677) collected in South Africa between January 2013 and March 2019, we study changes in beverage prices following the introduction of the HPL. We find null price increases among un-taxed beverages and find significant price increases for carbonates, the largest taxed product category. However, within carbonates we find similar increases in price for low- and high-sugar brands, despite the underlying difference in tax liability. In addition, while we find evidence of product reformulation, we find significant price increases among the brands that reduced their sugar content. While the findings are broadly consistent with the price changes of volume-based SSB taxes, future considerations of price effects of sugar-based SSB taxes need to account for the opportunity for intra-firm heterogeneity in price response among large multi-product firms. SN - 1873-5347 UR - https://www.unboundmedicine.com/medline/citation/31472286/Sugar_based_beverage_taxes_and_beverage_prices:_Evidence_from_South_Africa's_Health_Promotion_Levy_ DB - PRIME DP - Unbound Medicine ER -